Sunk cost VS floating cost

narayani.ankit
Posts: 3
Joined: Tue Dec 02, 2014 1:51 pm

Sunk cost VS floating cost

Postby narayani.ankit » Sat Dec 06, 2014 11:33 am

Sunk cost is not a part of the incremental cash flows..But should it be added to initial cost?And how do we treat floating cost?

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Sunk cost VS floating cost

Postby edupristine » Tue Dec 09, 2014 9:18 am

Sunk cost should be added to initial cost for the correct treatment because you have spent this by doing research for demand analysis, market analysis,product viability check that all related with your new project.

Floating cost: When company issue new shares they have to pay some charges like legal fees, underwriting charges etc. And we include this floating cost in WAAC.


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